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Tag: Transformation

Empowering ourselves: The past is past but the future is not here yet!

Empowering

By Professor Bonang Mohale, Chancellor of the University of the Free State After World War II, in a new age of empire, great powers aimed to carve up the planet and nations pledged to create a more equal and law-abiding world. Now, Russia, China and the USA are returning to an older model in which powerful countries impose their will. Nearly five years since the COVID-19 pandemic upended the global economy, growth is slow but stable, inflation has gradually declined in advanced economies and trade trends have turned positive. Despite this, there remain challenges such as high public debt burdens, ongoing geoeconomic tensions and the potential impact of industrial policies on smaller countries.  Poverty reduction is possible China has lifted over 800 million people out of poverty since the late 1970s. This is the largest reduction in inequality in modern history by focusing on no more than six economic reforms, namely economic growth (which grew rapidly after 1978 with an average annual growth rate of over 9%); infrastructure investment (invested in roads, railways, water supply and electricity); education and health (improved access to education, health care and social security); targeted policies (targeted the most poverty stricken areas with public policies); data collection (used data to identify the poorest areas and their needs and public support and mobilised the public to assess the status of each household). China’s poverty reduction efforts have helped the world achieve the UN 2030 Agenda for Sustainable Development goals. South Africa’s tax base According to the latest tax statistics from the National Treasury and the South African Revenue Service (SARS), 490 676 South Africans earned over R1-million in the 2024/25 financial year. This figure represents 6.7% of the country’s 7.4 million registered taxpayers and marks a significant increase of 82 000 individuals compared to the previous financial year when 408 288 South Africans earned above this threshold. These millionaires, who cover around 50% of all assessed income tax paid in the 2024 tax year, demonstrate the country’s progressive tax regime is in full effect, with the majority of income tax being paid by the country’s richest individuals at R2.2-trillion in gross tax revenue – R87-billion or 4.2% more than in the prior year. Personal Income Tax (PIT) revenue remained the biggest contributor to the tax haul, accounting for 35.7% – R641-billion of the total tax collected. Just 1 660 182 individuals, a mere 2.6% of the country’s 64 million people contribute 76.2% of all personal income tax. The situation is equally concerning in the corporate sector where only 1 051 companies, representing 0.1% of the total, pay 72.3% of all company income tax. Over 30% of the population, approximately 19.2 million people, currently rely on social grants, a figure projected to grow to 19.7 million by 2026/27.  This means that about 12% of South Africans who pay income tax are supporting a social safety net for nearly half the population!  Youth unemployment Youth unemployment has been at catastrophic levels since ‘two weeks in July 2021’ at 74.9 percent! Four years later, it is still hovering at 60.2% compared to Spain’s 26.6; France 20.5; Italy 17.7; China 17.1; Turkey 15.8; Canada 14.4; UK 14.4; USA 9; Australia 8.8; Netherlands 8.7; Germany 6.5; South Korea 5.5; Japan 3.2 and Switzerland 2.7. It is Mosibudi Mangena who opines that, ‘poverty and inequality are a menacing reality in South Africa. Unless the state and the citizens do something to share the fruits of the economy, things might unravel very soon. It is simply unsustainable to have wealth concentrated in the hands of a minority race whilst the vast majority wallow in abject poverty’. Human rights Human rights are those basic and fundamental rights to which every person – for the simple reason of being human – is entitled. These rights are inalienable – a person has them forever and they cannot be taken away. The natural rights of South Africans received no protection before the country became a constitutional democracy in 1994. Chapter 3 of the Interim Constitution introduced legally protected fundamental rights to South Africa for the first time. Now fundamental human rights are entrenched in Chapter 2 – Sections 7 to 39 – of the 1996 Constitution.  The Bill of Rights is arguably the part of the Constitution that has had the greatest impact on life in this country. As the first words of this chapter say: ‘This Bill of Rights is a cornerstone of democracy in South Africa. It enshrines the rights of all people in our country and affirms the democratic values of human dignity, equality and freedom.’ It has also been the source of the majority of the groundbreaking rulings the Constitutional Court has handed down. In an address to the South African Constitutional Assembly on 8 May 1996, the day of the adoption of the final Constitution, President Rolihlahla N. Mandela declared that ‘now it is universally acknowledged that unity and reconciliation are written into the hearts of millions of South Africans. They are an indelible principle of our founding pledge –  ‘the glowing fire of our New Patriotism’. At the same occasion, Deputy President Thabo M. Mbeki asserted that the Constitution ‘constitutes an unequivocal statement that we refuse to accept that our Africanness shall be defined by our race, colour, gender or historical origins’.  Constitutional patriotism The University of the Witwatersrand’s Elsa Huyssteen reminds us that this is a patriotism of new South Africans who do not belong on the basis of race or ethnicity but on the basis of a shared loyalty to a constitutional state and a commitment to national unity, reconciliation and human rights. The creation of such a ‘constitutional patriotism’ is intended to establish the legitimacy of the outcome of the transition as well as to promote national unity and reconciliation, both seen as crucial to the consolidation of democracy in South Africa. Constitutional patriotism is seen as capable of meeting these challenges to the consolidation of democracy in South Africa as it ensures that the principles and values

Let’s debate about BEE – but with respect and nation-building responsibility

By Tshediso Matona (Commissioner: B-BBEE Commission) For me as the Commissioner for Black Economic Empowerment, a positive factor of the current sharp spotlight on BEE is the louder and widening conversation ensuing in the country about BEE policy and legislation.  When BEE and transformation are understood as a tool to correct racial inequality that our economy inherited from apartheid and colonialism, it becomes clear that it is a matter of existential importance which we do need conversation about, because transformation is an ongoing project; a work-in-progress. Equally, it is a matter that deserves to be engaged with respect, integrity and nation-building responsibility, because it is about our painful past and our desired future; as such, our debates must be fruitful and take the country forward. Moreover, whatever US President Trump’s quarrel is with BEE, the events ensuing from it serve to affirm to South Africans that transformation is our domestic, sovereign issue, rooted in our circumstances, and best answered by none other than ourselves. This moment prompts us to recall that it is we, the people of South Africa, black and white, who proclaimed in our Constitution that “We Recognise the injustices of the past” and “Believe that SA belongs to all who live in it” and that we commit to “Heal divisions of the past and establish a society based on social justice”; and to this end to adopt “laws and other measures to advance persons disadvantaged by unfair discrimination”, including the use of preferential procurement. Any ideas that lower the bar of our values and ideals seek to place us in reverse-gear as a country when we ought to be accelerating forward. Ironically, BEE follows in the footsteps of affirmative action, a policy born out of the self-same US. It is based on the principle that to achieve social justice, governments are enjoined to take proactive and targeted measures for the socio-economic upliftment and inclusion of certain population groups, as this would not be achieved by market forces on their own. This is practised in many countries and has evolved into formal global policies, such as Diversity, Equity, and Inclusion, or the Sustainable Development Goals under the UN, and the emerging corporate Environment, Social and Governance standards.  My view is that the newly emerging challenges against BEE, whether emanating within the country or sponsored from outside, are in fact an opportunity for us to deepen and discipline our dialogue about transformation as a nation. In doing so we need to be honest that transformation is an unfinished business, and to find each other about the imperative for changing the status-quo of living with the worst inequality in the world. To this end, the correct place to proceed from is accepting that BEE was created as a tool to solve the inherited problem of a racially skewed ownership, opportunities, and participation in the economy. At the same time, it is acknowledged that BEE as a transformation tool might not be working perfectly, and indeed many shortcomings and loopholes about BEE are being encountered. But this cannot justify this being mischievously exploited by those who now pretend that the problem for which BEE seeks to solve is no longer an issue. Such mischief amounts to a negation of our collective duty to implement the Constitution and correct the economic injustice inherited from our past Read the full story in the 24th edition of Impumelelo: Top Empowerment and find out what the numbers say about transformation in South Africa.

The reality is that South Africa’s agriculture is thriving

By Wandile Sihlobo Since US President Donald Trump commented about his “imaginary” land grabs in South Africa, some among us have started pushing a misleading narrative that agriculture is under pressure and has been failing for a while. The inept municipalities, poor road infrastructure, stock theft, and port inefficiencies all contribute to this narrative of failure and despair. Stories of the failings of land reform farms also add to this sentiment of regression in agricultural progress. But this narrative is far from the reality of the South African farming sector. Regardless of how experts feel about the state’s capacity and the government’s policy stance since the dawn of democracy, the one undeniable fact is that the sector has grown tremendously – and indeed, not failing.  Data from the Department of Agriculture shows that domestic agricultural output in 2023/24 had more than doubled the size in 1994. A few sectors did not drive this expansion, but it has been widespread; livestock, horticulture and field crops have all grown enormously over this period.  The higher production levels have mainly been underpinned by new production technologies, better farming skills, growing demand (locally and globally) and progressive trade policy. The private sector has played a major role in this progress.  South Africa was the world’s 32nd largest agricultural exporter in 2023, the only African country in the top 40 in value terms. This was made possible by a range of trading agreements the South African government had secured over the past decades, the most important ones being with African countries, Europe, the Americas, and some Asian countries. The African continent and Europe now account for about two-thirds of South Africa’s agricultural exports, and Asia is now also an important market. The agricultural subsectors that have contributed most to this progress in exports are fruits, wine, wool and grains. South Africa now exports roughly half of its agricultural products in value terms, reaching a record $13.2-billion in 2023, according to data from Trade Map. The friction surrounding SA-US relations has added to the view that South Africa may be pushed out of AGOA and that agriculture would be under pressure in such a scenario. However, the reality is that South Africa’s agricultural exports directly to the US account for only 4% of the overall agricultural exports. And even if South Africa could be out of AGOA, that wouldn’t mean a blockage, but there would be tariffs of around 3%, reducing the competition of South African products.  To be clear, I am not minimising what is at stake; the agricultural products South Africa exports to the US include citrus, nuts, wine, grapes, and fruit juices, amongst other products. For these industries, an exclusion from AGOA would be negative, but it would not be a collapse of SA agriculture. Beyond exports, the increase in agricultural output over the past 30 years is why South Africa is now ranked 59th out of 113 countries in the global food security index, making it the most food-secure country in sub-Saharan Africa.  I recognise that boasting about this ranking when millions of South Africans go to bed hungry daily may ring hollow, as I pointed out after a few presentations where I cited these statistics. However, it is essential to note that many South Africans lack access to food due to the “income poverty challenge” rather than lack of availability due to low agricultural output, as in other parts of Africa. South Africa produces enough food but does not export all of it. A lot is kept domestically for the local market. To address poverty, South Africa must ensure employment and that households have sufficient income to buy food. The disappointing part of South Africa’s agriculture is the exclusion of black farmers. As I argued in my recent book, A Country of Two Agricultures, “Nearly three decades after the dawn of democracy, SA has remained a country of ‘two agricultures’. On the one hand, we have a subsistence, primarily non-commercial and black farming segment; on the other, we have predominantly commercial and white farmers.” The book adds that: “the democratic government’s corrective policies and programmes to unify the sector and build an inclusive agricultural economy have suffered failures since 1994. The private sector has also not provided many successful partnership programmes to foster black farmers’ inclusion in scale commercial production. It is no surprise that institutions such as the National Agricultural Marketing Council estimate that black farmers account for less than 10%, on average, of commercial agricultural production in SA.” This lacklustre performance by black farmers in commercial agriculture cannot be blamed solely on historical legacies. The democratic government is also blamed for its inability to support the development of the new crop of farmers.  Fortunately, not all is lost. Plans and programmes are in place to sustainably increase the number of black farmers in the sector. The agriculture and land reform plants are not aimed at replacing the existing farmers with new black farmers. The government has around 2.5 million hectares of land to distribute with title deeds to black farmers. This will be “growing the agricultural piece” without threatening the property rights in the country.   South Africa’s agriculture is robust and has room for growth. As we progress toward supporting the sector, there must also be room for young people to be included. Wandile Sihlobo is chief economist of the Agricultural Business Chamber of South Africa (Agbiz) Sources: The Conversation | Democratic Alliance | DALRRD | Economist Impact | The Conversation

Getting the best from board diversity

By Professor Parmi Natesan If it is accepted that a board’s performance is directly linked to the performance of the organisation it governs, then the board’s composition is clearly a hugely important determinant of its effectiveness. This is particularly true now that boards are in the spotlight for the quality of the decisions they make, and also now that the business environment has become so complex, and the stakeholders that need to be satisfied are so varied. In this environment, goes the argument, the insights offered by a diverse group of directors will make for better oversight and decision-making.  This makes intuitive sense, but it’s also broadly borne out by research. Now-venerable research from the Boston Consulting Group’s Henderson Institute shows that companies with more diverse leadership teams report revenue from innovation that is higher than those with below-average diversity scores (45% to 26%). The same institute also showed that diversity is linked to future growth prospects.  For these reasons, as well as for fairness and moral redress, the JSE Regulations require a board diversity policy to be implemented, and King IV requires targets to be set for race and gender diversity on boards.  Is it genuine? Once it’s agreed that diversity is a good thing, it’s worth taking a moment to consider what it actually looks like. And here, understandably but regrettably, there remains a tendency to take the easy way out—what I call the tick-box approach, the appearance of diversity.  In South Africa, and elsewhere too, diversity typically means more women (gender diversity) and more people of colour (racial diversity). Thus we hear about a “diverse appointment” being used to refer to a female or ACI (African, ‘Coloured’ or Indian) appointee, and companies proudly list the relative numbers of each on their boards and executive teams. Greater representation of both women and people of colour is obviously a good start but, as the activist investor group Barrington Capital Group argued in a 2020 paper for the Harvard Law School Forum on Corporate Governance, demographic diversity is not the same as cognitive (or experiential, for that matter) diversity.  In other words, an overemphasis on demographic criteria can rob a board of the skills, industry knowledge and experience it needs.  Additionally, the point is often made that this tick-box approach means that the same old names keep cropping up on boards, which means that corporates are potentially missing out on the growing pool of ACI and female candidates who are experienced and competent to serve as directors. How are we doing? So if there is a good case for diversity, how much progress has been made?  The short answer would probably be “slow but steady”. When it comes to race, according to PwC’s Non-executive directors’ Practices and fees trends report (May 2023), black Africans now almost equal the percentage of white non-executive directors (47% to 44%), with Asians (5%) and ‘Coloureds’ (4%) corresponding fairly closely to national demographics. Excluding chairs, where whites continue to dominate (58%), black Africans (45% of non-executives) and whites (46%) are neck and neck for non-executive directorship positions.  As far as gender goes, females now make up 38% of non-executive positions, quite a way off their representation in the broader population, where women make up 51.1% of the total population. For a deeper dive into the progress on gender diversity, reference can be made to the Business Engage report, 2021 – Status of gender on JSE-listed boards, published last year. (This report quotes the 2021 figures, which represent an improvement as compared to the previous four years unless otherwise stated.) Several points stand out.  One point is reporting and disclosure—if we can’t see what companies are doing, we can’t hold them to account. Even at this late stage, 17 of approximately 296 listed companies still don’t have their governance reporting easily available on their websites, and 41 did not report specifically on gender at board level. Only 10 listed a web address for their gender policy.  There has been a big decline in the number of companies that set themselves voluntary targets for gender diversity on the board (27 as opposed to 2020’s 95).  All of this is unacceptable: the JSE requires listed companies to have a policy on the promotion of diversity at board level and also states that listed companies should apply King IV, which in turn requires them to set gender targets and disclose not only the targets, but also progress against them.  At the other end of the scale are the 33 companies that have appointed one woman to their boards and consider that box ticked—the “one and doners”.  Twenty-seven crops up again as the total of JSE-listed companies that have achieved gender parity, with a further 20 just one appointment away from this goal.  As regards female non-executive directors, the Business Engage report broadly correlates with the PwC figures quoted above. It’s interesting but disheartening to note that as regards board committees, women only achieve parity representation on the social and ethics committee.  At the executive level, women have a long way to go, with only 6% of listed-company CEOs and 22% of CFOs being female.  In conclusion, then, I would tend to argue that while companies are making progress in becoming more diverse, it is happening rather too slowly. Given that women are graduating in greater numbers than men, and are thought to control the majority of consumer spending, one is surely forced to conclude that the undoubted benefits of true diversity have not yet been fully recognised. Professor Parmi Natesan is the CEO of Institute of Directors in South Africa